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Afterthought: "Undue inducement" January 25, 2009

Posted by tomflesher in Uncategorized.
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In the previous post, I mentioned the Singapore government’s fear that too high a level of compensation for kidneys would provide an “undue inducement” for a citizen to sell a kidney. I assume this means that the government doesn’t want to set a price so high that it will cause an unethically high influence on a person’s decision to donate an organ.

In microeconomics as we know it, however, the market-clearing price of a widget is the point at which its supply curve intersects its demand curve – that is, the price where suppliers want to sell exactly as many widgets as customers want to buy. Price theory doesn’t take ethics into account. From the academic standpoint, it’s impossible for a price to be an undue inducement because price is based on the indifference point of the supplier.

Can a price be an unethical inducement to action? How can that be determined? Is it right, ethically, to set price controls under certain circumstances?